Understanding User-Defined Cost Component Values

After you set up cost components and standard rate and factor codes, you must assign a monetary value to each. The system adds these values to the net amount of each item that you set up. You can assign a net-added value manually, or you can assign a predefined value.

You can also assign a calculated value based on the total value of another cost component. In this case, the system calculates the net-added value based on the total for an existing cost component. In addition, you can assign a calculated value based on the net-added value of another cost component. The system calculates the net-added value based on the net-added value for an existing cost component. In both circumstances, the system calculates this value when you enter information in the Cost Components program. The costs are then rolled up into the cost of the item when you run the Cost Simulation program.

For extra costs, the system can calculate the net-added value by multiplying a rate and factor. If you enter both amounts, the system multiplies the two numbers to calculate the net-added cost for the cost component for that item.